12 Implementing Strategy in Companies That Compete in a Single Industry 1 Overview Strategy implementation How a company should create use and combine organizational structure control systems and culture to pursue strategies that lead to a competitive advantage and superior performance 2 Implementing Strategy 3 Six Organization Shapers Buyer Power Variety and solutions Buyers are gaining power and learning how to use it Customers do not want bundle of products and services They want them integrated into a solution The Internet The web site becomes a single face to the customer forcing functions to integrate 4 Six Organization Shapers Multiple dimensions of organizations Functions products geographies old Segments solutions channels processes new Change Rapid change requires management to relearn and re decide To make more decisions more frequently It requires more decentralized management and networks of decision makers 5 Six Organization Shapers More variety more comprehensive solutions FASTER Shorter lead times shorter cycle times Speed is a force for decentralization Can you think of examples 6 Competitive Advantage An organization design that facilitates Variety Change Speed and Integration is a source of competitive advantage It is difficult to execute but also difficult to copy 7 Tradeoffs Hype There has been an overselling of credible ideas Teamwork reengineering virtual organizations etc Any organizational design requires tradeoffs and will have positives and negatives 8 The Star Model Strategy People Structure Rewards Processes 9 The Star Model Strategy Is the company s formula for winning Goals mission objectives values Delineates products markets value proposition competitive advantage First part of the model to be addressed Establishes criteria for choosing among different organizational forms Drives resource allocation 10 Structure Specialization Shape Span of control flat vs tall structures Distribution of power Type and number of job specialties Centralization vs decentralization Departmentalization Function product process market or geography 11 Processes Vertical processes Business planning budgeting resource allocation decisions Horizontal or lateral processes Designed around the work flow Cross functional Value chain emphasis 12 Rewards Purpose Some Issues To align the goals of the employees with the goals of the organization Individual vs Team Function vs Cross function citizenship Monetary vs Non monetary rewards Rewards must be congruent with other parts of organization design 13 People Human resources Recruiting selection rotation training development Creating the skills and mind sets needed to implement the strategy culture Must also develop organizational capabilities Flexibility ability to work with others Knowledge management 14 Implications Structure is only one facet of design Structure usually overemphasized status and power issues Processes rewards and people are becoming more important Congruence Different strategies lead to different organizations All policies must be aligned and in harmony 15 Matching strategy and structure Departmentalization Departments arise when org size 24 Consider Functional Product Market Geographical Process Hybrid What are the dis advantages of each 16 Five Types of Lateral Processes Voluntary or informal E coordination Formal group Full time integrators Rotation interdept events co location mirror image depts consistent reward system Project managers brand managers process managers etc Matrix organization Level of coordination grows but so does cost and difficulty of implementation 17 Types of Strategic Control System Personal control Output control Face to face interaction Performance goals for each division department and employee Behavior control Rules and procedures to direction actions or behaviors of divisions functions and individuals Operating budget Standardization 18 Strategic Reward Systems Based on strategy managers must decide which behaviors to reward A control system measures those behaviors and links the reward structure to them 19 Organizational Culture Culture and strategic leadership Traits of strong and adaptive corporate cultures Bias for action Sticking with what the organization does best Motivating employees to do their best Anything else Is culture a control mechanism 20 How Organization al Design Increases Profitability 21 Restructuring and Reengineering Restructuring involves Streamlining hierarchy of authority and reducing number of levels Downsizing the workforce to reduce costs Reasons Change in the business environment Excess capacity Organization grew too tall and inflexible bureaucratic costs To improve competitive advantage and stay on top 22 Restructuring and Reengineering cont d Reengineering Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements Focuses not on functions but on processes which cut across functions 23 Exercises Wal Mart Control System Soft Drink Restructure 24